Advanced Business
Models in
International
Higher Education
Advanced Business
Models in
International
Higher Education
Edited by
Jessica Lichy and Chris Birch
Advanced Business Models in International Higher Education
Edited by Jessica Lichy and Chris Birch
This book first published 2015
Cambridge Scholars Publishing
Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Copyright © 2015 by Jessica Lichy, Chris Birch and contributors
All rights for this book reserved. No part of this book may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without
the prior permission of the copyright owner.
ISBN (10): 1-4438-7211-3
ISBN (13): 978-1-4438-7211-9
TABLE OF CONTENTS
Introduction: Facing Change and Challenge in an Era of Creative
Destruction .................................................................................................. 1
Jessica Lichy and Chris Birch
Using Business Model Stereotypes to Explore Strategic Innovation
in Higher Education ..................................................................................... 5
Victor Newman
The Role of Higher Education Institutions in Supporting Innovation
in SMEs: University-based Incubators and Student Internships
as Knowledge Transfer Tools .................................................................... 23
Athina Piterou and Chris Birch
Towards a Model for University-Industry Collaboration through SME
Workshops and Innovation Vouchers, With Transferable Practices
for other European Markets ....................................................................... 33
Jerry Allen
Embedding Modernisation through a New Business Model ..................... 43
Jessica Lichy, Alexandre Kozlov and Ekaterina Dzhaim
Benefits and Challenges of International Mobility in Higher Education ... 61
Eilis O’Leary and Fiona O’Riordan
Tearing Down Physical Boundaries through Globally-focused Online
Education: An Indian Perspective ............................................................. 75
Prashant Pereira
The Innovative Business Model of Rotterdam Academy .......................... 85
Bert Reul
The Engaged Business Model for Higher Education: Transforming
Academia in the 21st Century .................................................................... 93
Frederic Bill and Erik Rosell
vi
Table of Contents
Extending and Accelerating Global Business-Education
Partnerships ............................................................................................. 111
Dylan Kissane and John Farrell
Contributors ............................................................................................. 131
INTRODUCTION:
FACING CHANGE AND CHALLENGE IN AN ERA
OF CREATIVE DESTRUCTION
JESSICA LICHY AND CHRIS BIRCH
Higher education has, throughout history, faced radical changes and
challenges in various forms and amplitude. At the time of writing, The
Economist (2014: 11) talks of “creative destruction”, a term referring to
the rising costs, changing labour markets and new technologies that will
irreversibly shake the system. An increasing number of individuals will
follow some form of educational programme over the next couple of
decades: more people combined than in all of human history to date. Most
of the capacity to accommodate this demand is yet to be developed, and
much of it will be created in the global online environment. The shift in
what is currently ‘valued’ in higher education (towards a knowledge-based
economy) is driving the need for new business models: “Strategic
differentiation, focus and client alignment has become dramatically more
important” (Kennie and Price, 2012, p.15). This Special Issue presents the
thinking of researchers and academics from IDRAC Business School and
partner universities regarding the new stakeholders in higher education
systems and structures, and the kinds of business models which are needed
in order to offer a sustainable value proposition.
As the pace of change accelerates, higher education providers need to
redefine their strategy to ensure sustainable success. The articles presented
in this Special Issue provide an insight into various changes taking place in
higher education institutions (HEIs) and their respective responses to these
changes. The authors in this collection of articles highlight the belief that
pervasive technology and ubiquitous Internet access have transformed
higher education, putting pressure on HEIs to review their traditional
approach in order to deliver anywhere, via any ware, at any time.
It is often said that we are living in a knowledge-based economy, as
though this were a new phenomenon. Arguably, so too were those who
lived through what we now refer to as the Industrial Revolution of the late
2
Introduction
eighteenth and nineteenth centuries. It is likely that historians of the future
will look back and judge that we are today living through another
revolution, driven by new technologies, discoveries in medical sciences,
emerging global markets, instant mobile communications and increased
digitization. The models of higher education which marched triumphantly
across the globe in the second half of the twentieth century are now in
need of radical and urgent transformation. The impact of massive change
on our everyday lives is colossal, yet perhaps we are too close to see this.
What is different now is the rapid pace of change. Undoubtedly, this is the
challenge that we now need to recognize and reflect upon in relation to the
underpinning support structures and infrastructure of our societies.
Many articles have been written, policies developed and strategies refined
relating to the current changes taking place in higher education. Much has
been said about the need to update teaching and learning, in order to
maintain future competitiveness and standards of living. HEIs worldwide
are under pressure to provide education that leads to employment.
Academics and researchers have a critical role to play in society; the onus
is on school managers to integrate a philosophy of employability, to
support SMEs to be smarter, and to be more innovative as communities of
learning. Both the popular press and academics have initiated debate
around the changes taking place and the effectiveness of current business
models in higher education. The weaknesses of the current system have
been exposed and discussed at length, the general consensus being that a
break with the past is needed. Now is the time for systemic change and
development, to prepare learners for the unchartered and uncertain world
ahead. But … are we ready, able and willing to oblige?!
References
Johnson, M.W., Christensen, C.M. and Kagermann, H. (2008).
Reinventing your business model, Harvard Business Review,
(December); 50-60
Kennie, T. and Price, I. (2012). Disruptive innovation and the higher
education ecosystem post-2012, Leadership Foundation for Higher
Education, (February).
Osterwalder, A., Parent, C. and Pigneur, Y. (2004). Setting up an ontology
of business models. In Proceedings of 16th International Conference
on Advanced Information Systems Engineering (CAiSE03) Workshops
(3), 319-324
Jessica Lichy and Chris Birch
3
Sinfield, J.V, Calder, E., McConnell, B., Colson, S. (2012). How to
Identify New Business Models, MIT Sloan Management Review,
(53)2, 84-90
The Economist Print Edition. (2014). Creative Destruction, June 28th
USING BUSINESS MODEL STEREOTYPES
TO EXPLORE STRATEGIC INNOVATION
IN HIGHER EDUCATION
VICTOR NEWMAN
As the global market for Higher Education evolves and grows, HE
organizations’ ability to adapt and perform in a fast-moving global
economy will be at a premium. It could be argued that the idea of business
models’ (BM) application within the HE context will be problematic for
reasons such as a lack of shared understanding of what BMs can usefully
do, absence of standardization of BM architecture and terminology, and
academic cultural resistance to an emerging political expectation that
academic excellence within sectors of the HE industry is a potential driver
of economic power and wealth-creation, and perhaps too important an
issue to be left to HE institutions. Chesborough’s observation that
inflexible BMs have a prophylactic effect on innovation means that leaders
in organizations need to develop the capability to innovate BMs to deliver
new value, instead of rejecting innovations that don’t fit their current
legacy model.
The purpose of this paper is to take a collection of archetypal business
models, applying them to the HE context to discover their potential as a
source of innovation for delivering current and new value and as the
foundation of a potential future BM “playbook” for influencing agile and
adaptive HE innovation practice.
The HE Innovation Context
This paper attempts to inform discussions on the impact and potential for
strategic innovation within the context of higher education (HE) through
developing new business models. Each day brings new stories of
entrepreneurial innovation within the context of education and HE in
particular via the internet. Often, when carefully examined, these stories
suggest a pace of change that is more glacial than frenzied. Thus, in 1969,
6
Using Business Model Stereotypes to Explore Strategic Innovation
in the same year that the Open University was founded as the world’s first
distance-learning university and later began delivering courses in
partnership with the BBC, Nelson Mandela began his incarceration on
Robbin Island and commenced studying for his law degree via postal
correspondence.
What is surprising (technologically) is the slow emergence of new, or at
any rate different, education models via the postal system. It was followed
by the wireless, and more recently the internet, as a service that can
potentially compete with the educational establishment in challenging
both the traditional system of site-based, co-located, face-to-face, oral
teaching or content delivery and social reinforcement via lectures,
seminars, tutorials, and the powerful educational publishers’ strategic
position as suppliers of educational content via textbooks (Pearson/ FT).
What does seem to be happening currently is in the nature of an open landgrab, where consumers may benefit from a commoditisation of education,
and its extension into the developing world where a new class of
consumers serving growing economic powerhouses are emerging and
purchasing new technologies for communication without the encumbrance
of traditional legacy models attempting to block change and retain control.
This commoditisation revolution may not destroy established HE brands,
but will certainly disrupt late adapters and lead to agile new entrants to the
emerging reality, a revolution that is probably driven by the elegant
example of the iTunes business model that is both a means of aggregating
transactions, taxing them and disintermediating competitors at the same
time.
The current evolution of ‘iHE’ (internet-driven HE) is very much
influenced by, and at the same time modelled upon, this Apple approach to
doing business through selling HE transactions directly to customers to
consume via the internet. Of course, the key difference is that traditional
HE tends to involve a series of transactions which are mediated in delivery
as well as consumed, and whilst the analytics of those transactions are
aggregated and interpreted to connect consumers with similar products
(actively reconfiguring customer segments in real-time), few transactions
or products are being commissioned to fill current gaps in supply.
However, it is the elegant logic of iTunes that draws investors into
engineering new and similar business models in iHE, even if the actual
size of the market sector (as a global market) may be limited. However, if
we had a global HE market model, even the iHE market sector would be
Victor Newman
7
significant in terms of aggregated volume, and this would require the
development of appropriate BMs to capture other attractive market
segments as well as evaluating them to know which ones to exploit, or
avoid.
Strategy and Business Model Innovation
Chesbrough’s (2010) exploration of the barriers to BM innovation restated
the obvious, that BMs are the means by which companies commercialize
new ideas and technologies to realize an appropriate return on investment,
and that while organizations may have “extensive investments and
processes for exploring new ideas and technologies, they often have little
if any ability to innovate the BMs through which these inputs will pass”…
that “the same idea or technology taken to market through two different
BMs will yield two different economic outcomes. Chesbrough in effect
restates Goldratt’s (1993) observation that no process can go faster (or
accept inputs) than its narrowest bottleneck will allow and so it makes
good business sense for companies “to develop the capability to innovate
their BMs”. In other words, innovation capability includes the ability to
innovate ideas, technologies and BMs (and that these will tend to be seen
as disruptive innovations in terms of those hosting the legacy BM). That
innovative ideas need innovative BMs, and the ability to productise an
idea into a product or service, requires BM architectural skills.
Chesbrough illustrates this point with the examples of 3Com and Ethernet,
Radiohead’s “pay what you like” download strategy for achieving volume
sales, and Johnson and Johnson’s Velcade multiple myeloma drug “pay by
results” BMs in changing the rules for realising value in a supposedly
inflexible marketplace.
At this point, it becomes obvious that if institutions within the HE industry
are to survive by defending their current portfolio, responding to global
pressures to commoditise by reconfiguring the delivery of HE products
and services, or even anticipate the future direction of HE as an industry,
then becoming BM-literate and understanding BM architecture will be a
HE leadership pre-requisite in order to model new BMs experimentally
before adoption. An appropriate approach to BM mapping or modelling is
Osterwalder and Pigneur’s (2010) method for explicitly visualizing the
key processes that compose a high-level but functional BM.
8
Using Business Model Stereotypes to Explore Strategic Innovation
BM Expectations and Requirements
The BM as a term serves as a token by authors of an intention to construct
a model of a situation – and not a specific technique like QFD, idef0 or
Costs of Poor Quality. All it offers is an attempt to “model” or capture the
essential nature of the way a business is designed or has developed to
deliver value without suggesting that the “model” or representation is
optimal. It often involves some attempt at influence diagrams to represent
dynamic relationships systemically. There are few standards and only
relatively recently an attempt to objectify the approach in a uniform
manner which as Casadesus-Masanell and Ricart (2010) observe, enables
both aggregation and decomposition.
In other words, a systemic type of BM which is simple enough to enable
aggregation in zooming-out to see the big picture and the larger, visible
interactions, and yet also complex enough to enable decomposition by
zooming-in to focus on key elements or building blocks in isolation and
examine them in detail. A system of modelling the way a business creates
and delivers value to customers needs to be both simple at a high level and
potentially complex at a tactical level, because the use and application of
business models in HE is likely to be an innovation, even in a business
school, and as such, is going to involve social and political change as a
culture carrier for alternative possibilities and require a deep level of detail
to satisfy critics.
Simplicity is useful when teaching audiences about the power of current
business models of organizations they may be familiar with, but essential
when trying to apply a business model to oneself or engaging participants
in modelling their current realities. A successful system of modelling
business should also provide a robust and shared language that enables
analysis, synthesis and insight through the playful manipulation of aspects
of business models to generate and consider novel strategic alternatives.
As Osterwalder and Pigneur helpfully observe, “without such a shared
language it is difficult to systemically challenge assumptions about one’s
business model and innovate successfully.”
An important question to answer will be: who generates the new business
model? Ideally, business models should be co-created in order to build
ownership and internal diplomacy, but this could be used as a means of
obfuscation and sabotage. Similarly, a suitable HE business model
(HEBM) could involve forms of innovation around curriculum content,
Victor Newman
9
pedagogy (new ratios of social engagement to digital delivery and
support), staff utilisation, status and reward systems.
Successful implementation may require a deep systemic crisis that cannot
be ignored, involving refocusing on specific customer segments and
abandoning others, requiring closure of the old organization and designing
a new organization in order to enable the new HEBM to succeed. The
future shape of HE is going to involve a tension between the past and the
future, involving agility, adaptability, knowledgeability, intense customer
insight and the ability to operate within several BMs at once.
Osterwalder & Pigneur’s BM Generation Approach
In Osterwalder’s BM Canvas or template (BMC) the 9 BM building
blocks within the four main areas of business are composed as follows, as
in Figure 1: Osterwalder & Pigneur’s BM Canvas.
The Offer Area is otherwise known as the Value Propositions or “the
bundle of products and services that create value for a specific Customer
Segment. The Value Proposition is the reason why customers turn to one
company over another. It solves a customer problem or satisfies a
customer need. Each Value Proposition consists of a selected bundle of
products and/or services that caters to the requirements of a specific
Customer Segment. In this sense, the Value Proposition is an aggregation,
or bundle, of benefits that a[n] organization offers”.
The Customers’ Area includes 3 of the remaining 8 BMC building
blocks: Customer Relationships (CR), Customer Segments (CS) and
Channels (CH).
The Channels (CH) block outlines how an organization reaches its
Customer Segments (CS) to deliver a Value Proposition (VP). The
Customer Relationship (CR) block categorizes the type of relationship an
organization builds with specific Customer Segments, where the Customer
Segment (CS) block identifies specific groups of people or organizations
to influence and serve.
The Infrastructure Area includes 3 of the remaining 5 BMC building
blocks: Key Partnerships (KP), Key Activities (KA) and Key Resources
(KR). The Key Partnership (KP) block captures the network of necessary
suppliers and other partners that make the business model operate. The Key
10
Using Business Model Stereotypes to Explore Strategic Innovation
Figure 1: Osterwalder & Pigneur’s BM Canvas
Victor Newman
11
Activities (KA) block details the essential activities and the Key Resources
(KR) block identifies the essential assets involved in making the BM
function effectively.
The Financial Viability Area hosts the last 2 remaining BMC building
blocks: Revenue Streams (RS) and Cost Structure (CS). The Revenue
Streams (RS) block quantifies the cash an organization generates within
each Customer Segment (where costs are subtracted from revenues in
order to quantify the level of earnings), and the Cost Structure (CS) block
details the most important costs involved in operating the BM.
The great advantage of the BMC is its simplicity and generalizability, in
other words it is simple enough with its 4 areas and 9 building blocks to
characterize most situations to enable aggregation (zooming-out/ bigpicture thinking) and decomposition (zooming-in to think in detail).
However, there are several weaknesses or gaps in its design: firstly,
attempting to keep everything on one canvas, when it needs a BMC
prerequisite or prequel in the form of a Value Proposition Hypothesis
(VPH) to capture the dynamics of the hypothesis about how value is
created with whom (in other words, a Value Proposition Hypothesis that
expresses what is believed to be true about choices that inform the
strategic design and consequences that are anticipated as a result).
Recently Osterwalder and Pigneur (2014) have attempted to fill this
vacuum by supplying a Value Proposition Canvas connecting customer
pains and gains with appropriate products and services via their BMG
website. The second major weakness or blind-spot is the issue of the
power of branding, which needs special treatment and analysis.
Alternatively, one way of representing this simply is to modify CadesusMasanell and Rocart’s (2010) Ryanair Choices & Consequences table, into
a workable BM Value Hypothesis (VPH).
The famous Ryanair no-frills (pile ’em high, sell ’em cheap and fast)
strategy was an adaptation of Southwest Airline’s BM for the US market,
considering 4 strategic options for escaping bankruptcy in 1991 as
described by Rivken (2000), wherein the options were either to a) exit the
airline industry, b) copy competitors by adopting business class, c)
intermediate by becoming a “feeder” airline out of Shannon, or d) adopt
the lean Southwest BM approach.
12
Using Business Model Stereotypes to Explore Strategic Innovation
Table 1: Ryanair Value Proposition Hypothesis
Victor Newman
13
Applying VPH thinking to Ryanair’s BM includes 5 essential
interconnected elements as detailed in Table 1: Strategic Design (what
were we trying to do?), Emergent Customer (who wanted it?), Design
Features (what did we deliberately engineer into the VP?), and the
Benefits and Risks involved (what was working for us, and what negative
elements might appear?) in order to demonstrate how a deliberate strategy
of simplification and variety-reduction can confer advantage in attracting a
certain type of customer.
What is interesting at this point is the often-neglected issue of value which
can either be understood in terms of added-value or New Market Value.
Added-value is the balance of financial value of a product or service
remaining when the costs of conformance (the costs of designing and
running a system to keep failure out) and non-conformance (the costs of
managing failure when it has occurred) are removed (McMillan, 1991).
Whereas New Market Value is a qualitative concept that describes the
shift in value of similar products in a market when an innovative product
is introduced. This New Market Value is always relative. This can either
be through marginal differentiation as in eco-cars based on non-fossil
combustion systems of rechargeable batteries (even though the energy
used to charge them may be fossil-based) or so-called em-fitted but
conventional cars designed to reduce the potentially powerful cumulative
impact of unshielded electro-magnetic fields generated by the car
operating system upon the driver’s autonomic system (influencing their
ability to think clearly and safely), similarly the driverless, autonomous
Google Car. Added-value and New Market Value are complementary
concepts. Obviously, even for products that introduce high New Market
Value, the issue of maximising added-value is important in order to reduce
waste and generate profits for reinvestment and stakeholders.
Once the issue of having a useful BMC or BM template is negotiated and
the need to complement it with a logical VPH, the next interesting piece is
to examine the generic templates supplied by Osterwalder (and others) and
consider the implication of putting them into the HE context as a form of
innovation exploration, i.e. deliberately triggering creative thinking
through the use of analogy or metaphor, where the BMC acts as a means
of using Strange/Familiar Synectics provocation thinking approaches,
wherein a familiar problem is approached with a strange technique, and a
strange problem is approached via a familiar technique to trigger insightful
thinking (VanGundy, 1988).
Using Business Model Stereotypes to Explore Strategic Innovation
14
Exploring with Osterwalder & Pigneur’s BM Archetypes
within the HE Context
What follows is a brief introduction to key ideas or archetypal business
model-related concepts explored in Osterwalder & Pigneur’s Business
Model Generation handbook.
Unbundling BMs to Explore 3 Business Types
Before introducing their BM templates featuring “The Long Tail”, “MultiSided Platforms”, “Free” and “Open” BMs, they usefully introduce 3
“Core Business Types” influenced by Hagel and Singer’s “Unbundled
Corporation” (1999) where un-bundling (or visualising 3 out of the 4
bundles or areas of the BM, the Offer, the Customer and the Infrastructure
as separate but complementary businesses can help to resolve the problem
of contradiction or tension by treating them as separate entities or
operations of the following type:
•
•
•
The Offer Area becomes a Product Innovation business that
focuses on developing new and attractive products and services
(and even new business models).
The Customer Area becomes the Customer Relationship
Management business which finds, attracts, acquires and retains
customers.
The Infrastructure Area becomes the Infrastructure Management
business constructing and managing high-volume transactional
platforms.
This unbundling, or area focus, complements the BMC model in that the
Offer Area or Value Propositions block (VP) maps with the Product
Innovation business, the Customer Relationship Management Area maps
with the CR (Customer Relationships), CS (Customer Segments) and CH
(Channels) blocks and the Infrastructure Management business maps with
KP (Key Partners), KA (Key Activities) and KR (Key Resources) blocks.
Un-bundling into these 3 types offers a potential hierarchy of BMs,
implying either the options of legally and financially unbundling these
businesses, or merely appointing MDs to each and managing the political
and economic integration through governance and perhaps at least 3 levels
of BM (corporate, business and functional unit) involving a corporate toplevel BM where 3 sub-level BMs are defined for each of the 3 unbundled
Victor Newman
15
business types, wherein the 9 blocks within each unbundled business type
have their own functional unit BM.
There are interesting implications for HE in such unbundled BMs. Taken
in reverse order, the Infrastructure Management business could involve a
deliberate strategy of building and managing capacity and becoming an
open broker of content on a global scale. The Customer Relationship
business could top and tail the Infrastructure Management business in
building relationships with new customers by becoming a strategic partner
with governments, global businesses and key customer trade segments to
anticipate and define current and emerging markets for products and
services. Finally the Product Innovation business could be engaged in
constructing innovative Knowledge Products which could either be tactical
or strategic in implication (like perhaps a philosophical replacement for
lean thinking), as well as repackaging legacy products into new
configurations. The key issue is that such unbundling would enable focus,
but would also require integration in order to succeed across all 3
businesses.
The Long Tail
The unbundled Infrastructure Management business discussed previously,
and its potential to operate as a broker of content or transactions translates
into Anderson’s (2008) Head and Long Tail curve of volume vs. variety
model, whereby the eponymous right-sided “tail” describes a graph
wherein the vertical axis measures the percentage of sales, and the
horizontal axis measures the number of discrete products. Anderson’s
Long Tail model seems to be a reworking of a cliff-like Pareto histogram.
Thus the left-hand end of the curve (nearest the vertical) or the “Head” is
tall but narrow, denoting a high percentage of sales of a few products
(Pareto’s 20% by volume delivering perhaps 80% of income or profit), and
the long right-handed “Tail” features a large number of products selling in
smaller volumes that literally tail off to the right (Pareto’s balance of 80%
of volume delivering perhaps 20% of income or profit). A very important
point to note is that the area of the tail tends to match the area of the head
(and thus makes it potentially worth exploiting) in his version of the
diagram.
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Using Business Model Stereotypes to Explore Strategic Innovation
Figure 1: Anderson's Long Tail Model
Anderson originally contextualised his Long Tail model within the
emerging digital media industry with its triple democratization enabled via
search-engines, and social media to find esoteric products, democratization
of tools of production and the democratization of distribution via the
internet. The last two features enable low inventory, reduced transaction
costs and the potential via social media for a unique product to either
become a viable and scalable product through global (and not just local)
market access, or to ride a trend and become mainstream. According to
Duke (2013) it is the promise of the scalability of a Long Tail HE strategy
that has driven the recent surge in investment via Silicon Valley venture
capitalists in “game-based complex software to design lessons for an
individual’s needs [presumably via front-end learning diagnostics and realtime evaluation] and to provide instantaneous assessment of pupils’
performance”, plus the potential of replicating Amazon’s ability to identify
emergent patterns of consumption to connect users/ consumers/ learners
with related (hidden) material to build demand. This has also led to the
Open University’s audacious experiment in FutureLearn (the UK’s first
MOOC course platform) with an intelligent infrastructure to host smarter
interaction with learners whilst providing scalable learning experiences.
The key to a successful HE Long Tail BM is going to be the establishment
of an open infrastructure platform with workflow disciplines which enable
rapid curriculum productisation, similar to those used in disintermediated
publishing (like Blurb.com) via:
Victor Newman
•
•
•
•
•
•
17
Smart content writing via fast adaption by authors to populate
smart learning templates,
Intelligent pricing strategies to encourage product and content
creation,
Cut and paste media management to keep materials fresh with
recent examples and alternative ways of explaining the same
thing to different audiences,
Traffic analysis to identify a product that is going to move out of
niche into mainstream,
Theme-spotting or opportunity identification to specify the
opportunity, rapidly define it, break it into chunks of curriculum,
identify useful experts and appoint editor content leaders to put it
all together.
Fast prototyping capability.
Multi-Sided Platforms: Free and Open BMs
Multi-sided platforms bring together “two or more distinct but
interdependent groups of customers. Gibney (2013) points out that they
create value by connecting these groups. Obvious examples include credit
cards which connect consumers to merchandisers, operating systems
connecting users of computers with PC manufacturers, newspapers
connecting readers with advertisers, and Google connecting advertisers to
consumers.
The key issue for multi-sided platform BMs is the “chicken and egg
situation”. In other words, the construction or acquisition of a viable
population to generate a sufficiently large volume of transactions that can
be taxed to generate profit. Relevant examples include Metro, a free
commuter daily newspaper that enables companies to advertise their
products and services to the commuter market segment; and MOOCs
(Massive Open Online Courses) offering free tuition (presumably this
means access to structured content without mediated social interaction)
provided by universities to hundreds of thousands of students. Whilst
MOOCs are free to consume by students, accreditation must be paid for.
Thus MOOCs are “free” multi-sided platforms, the equivalent of Gillette’s
free razor offer, or LinkedIn’s basic membership, acting as a low
transactional cost portal to showcase products to pull convinced
consumers into a deeper relationship and convert them to pay for
differentiated services at premium prices.
Using Business Model Stereotypes to Explore Strategic Innovation
18
The alternative to a traditionally-closed BM is to adopt elements of an
open BM whereby a business accepts the possibility that it doesn’t know
everything, nor employ the smartest people, and it could learn from others.
As Chesbrough (2006) put it “shorter product lifecycles and accelerating
costs spell doom for the older, closed model of innovation. Only by
accessing more ideas, and by using these ideas in more new products and
services, can organizations keep pace and achieve an economically viable
model of innovation”. Such an open BM is implicit in the original
unbundling discussed at the beginning of this section, in the adoption of
the Open Broker strategy based upon a smart learning infrastructure BM.
Putting It All Together
There are some simple rules for this emerging world of HEBM that go
back to the first unbundling exercise:
1.
Having great content is not enough, even if it is innovative it can
be hidden within publications and books and inappropriately
structured for audiences that could consume and use it to create
value.
a. How many current staff are merely recycling old
material and how few are thinking genuinely new
thoughts that are relevant?
b. How many HE organizations are consciously applying
Knowledge Leadership principles to the context of the
new global internet marketplace for HE to generate new
content and new curricula?
2.
Having a great infrastructure, even with smart learning analytics
but without great content will require an open BM to source
materials plus require a “freemium” strategy to populate it with
potential users for conversion to premium services (and a
reasonable rate of conversion). This will probably involve a
strategic partnership with either Google and/ or Cisco.
3.
The first 2 rules, if established, can enable the third
complementary rule which is their dependence upon a Customer
Relationship Management business with the ability to operate as
a genuinely honest open broker for HE content and a customised
learning process. If such a relationship is established with real
trust and agile sourcing, then customer insight can lead to the
Victor Newman
19
specification and construction of great content and can be
delivered to meet the customer’s needs and the role of becoming
a trusted strategic partner to key corporates and national
governments of emerging economies.
It has been the author’s experience both as an internal and external
curriculum broker involved in setting up internal corporate universities
and identifying external thought-leader and subject-matter expertise to
meet strategic and tactical requirements for delivering corporate strategy,
that it is rare that one HE institution serves a one-stop shop for all
corporate requirements. Thus, in spite of Harvard’s one-size–fits-all and
Stanford’s you-can-have-it-your-way-as long as you buy it here,
innovative companies are likely under the current HE global economy to
source HE with prestigious, branded suppliers.
Conclusion
The HEBM “Killer App” may not exist. But whoever establishes the
“gold” standard for strategic educational infrastructure to deliver HE
products globally over the internet, which grabs the largest populations via
multi-sided platform BMs, and converts them to premium priced
transactions, could change the HE market. It is the Long Tail curve which
will justify the pursuit of iHE (internet-driven HE) and enable the landgrab of the area under the curve of the tail, the capture of potentially 80%
of the product that delivers 20% of the global demand and which, with
smart analytics, could convert tail into head products.
But they won’t have it all. As Collis (2002) indicates, there will still be a
place for premium-priced business education with strong brand
associations, especially prestigious MBAs delivered traditionally or
supported by internet mediated learning like the Harvard MBA with
corporate customers for whom the higher the price, the better the
education. There could also be a legal risk to such global leadership via an
established strategic educational infrastructure with the perception that it
has become a cartel that limits the productivity of knowledge by restricting
access.
The narrative has tended to assume that content is merely content, but as
Powell and Owen-Smith (2002) suggest, the issue of intellectual property
and content management may also become problematical as a global open
education market is established whereby authors may control copyright, or
20
Using Business Model Stereotypes to Explore Strategic Innovation
also where university employers may assert partial and/or total ownership
of IP as a matter of contractual employment (as in life science businesses)
on the basis that, since they have invested in the individual, they deserve
an appropriate return on their investment.
The author has attempted to connect the issues of innovation, valuecreation and business models within the emerging HE context through the
functional Osterwalder and Pigneur BM canvas, made up of 4 bundles and
9 building blocks, to consider the potential, necessary insights to be gained
through unbundling, exploring multi-sided platforms offering free, closed
and open BMs. The future of HEBMs seems to be strongly connected to
the growth of the internet but the jury is out as to whether this will merely
democratise content, accelerate its globalisation or merely become another
Long Tail HE economy, or whether it will even enable the creation of
genuinely new knowledge products. The other issue may be political.
After all, if China can negotiate rationing of local content to its population
via Google, and establish foreign film quotas to protect its indigenous film
industry, then HEBMs will probably have to adapt to provide a mix of
foreign and local content.
At the start of this paper, Chesbrough’s observation that inflexible BMs
have a prophylactic effect on innovation was cited to make the point that,
ultimately, HE institutions will have to build adaptive and agile capability.
This will require not only the ability to model the current BM, but also the
ability to construct, prototype and test multiple BMs to meet the
requirements of different markets as they evolve. The Osterwalder and
Pigneur BMC is a useful if incomplete part of a necessary playbook or
toolkit for a new generation of leaders in the HE sector, but it needs to be
complemented with an explicit Value Proposition Hypothesis and tools
which explore and connect with the power of brands.
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THE ROLE OF HIGHER EDUCATION
INSTITUTIONS IN SUPPORTING
INNOVATION IN SMES:
UNIVERSITY-BASED INCUBATORS
AND STUDENT INTERNSHIPS AS KNOWLEDGE
TRANSFER TOOLS
ATHINA PITEROU AND CHRIS BIRCH
Abstract
Universities are increasingly expected to develop links with the business
community. At the same time, SMEs need to improve their skills and
knowledge base so that they can develop their innovation capabilities and
improve their competitiveness. Universities and other Higher Education
Institutions (HEIs) seek links with large businesses for reasons of prestige
and possibly access to funding. Hence, the links between university
departments/research centres and SMEs may have been side-lined
although they can be beneficial to both sides.
This paper reviews how links between SMEs and academia can foster the
innovative potential of SMEs. We focus on two initiatives: universitybased business incubators and student internships. Such initiatives enable
knowledge transfer from HEIs to small firms while the HEIs benefit from
building links with local communities and improving their objectives
regarding student employability. University spin-off companies are
additional evidence of links between universities and SMEs.
Acknowledgements
The research reported in the paper forms part of the New Deal for
Innovation (NDI) project, which is co-financed by Interreg IV, a France
(Manche) England programme, project reference 4130.
24
Role of Higher Education Institutions in Supporting Innovation in SMEs
Introduction
HEIs operate in an increasingly competitive environment where they need
to cater to diverse stakeholders. In the UK, employability is emerging as a
key concern in Higher Education policy (Pegg et al., 2012-HEA),
particularly since the recession and increase in student fees. In addition,
research evaluation increasingly takes into account the impact of
university research outside of academia. It is suggested that the
development of stronger industry links can enable universities to improve
the employability of their graduates. However, Karlsson et al. (2007)
identify that academics working with SMEs face hindrances within
existing structures. Simultaneously, SMEs need access to external
expertise so that they can improve their knowledge base and their longterm competitiveness. Yet, universities tend to seek linkages with larger
firms that are more likely to have an extensive knowledge base of their
own. Increased collaboration between SMEs and universities can help
foster the innovative potential of SMEs and at the same time enable
universities to improve the employment prospects of their graduates.
Characteristics of the SME such as size and sector may affect the nature of
the relationship to universities. This paper reviews different types of
university initiatives which enable knowledge transfer to SMEs. Firstly,
we consider the role of university-based incubators/business hubs.
University spin-off companies which operate within incubators
demonstrate the commercialisation of university research through the
establishment of small firms. Secondly, the role of internships in building
employability skills and in promoting innovation in small firms is
discussed.
University based Incubators: a tool towards effective
clusters?
This section discusses how universities attempt to promote small business
development through the establishment of business incubators. Such
incubators are meant to act as a knowledge transfer mechanism. Business
incubators are a particular form of organisation which aims at developing
clusters of connected businesses. The concept of business
incubators/business hubs is introduced before addressing how the
involvement of universities may improve their potential to enable
innovation. Examples of incubators established by UK universities are
presented to illustrate good practices for their operation. The evaluation of